Conseco Inc. has succeeded at replacing some of its secured debt with cheaper, more flexible unsecured debt.[@@]
Conseco, Carmel, Ind., had to borrow money on unattractive terms to finance its recovery from Chapter 11 bankruptcy reorganization proceedings in September 2003.
Conseco, a holding company for life and health insurance companies, recently asked investment bankers to help it reduce the principal amount borrowed through a senior secured credit agreement.
The investment bankers responded by helping Conseco raise a total of $330 million by issuing convertible debentures, or unsecured notes, through a private placement.
The proceeds helped Conseco reduce credit facility debt to $447 million, from $767 million. The company also reduced the spread on a major portion of its debt to 2 percentage points over the London Interbank Offered Rate, a major international interest rate benchmark, from 3.5 percentage points over LIBOR.
Improvements in the company's credit facility rating could cut the spread to 1.75 percentage points over LIBOR, Conseco says.
© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.
